Pressures Faced in it

Pressures Faced in IT

• IT departments face growing pressure to improve their business value by accelerating the delivery of new applications and technologies and improving service to users
• At the same time, basic maintenance and support of the existing application portfolio consumes up to 50% to 80% of IT resources —posing a serious roadblock to new initiatives and services that can enhance an organization’s competitive position

Decision Making Model

Business Strategy

• It enables the business to better manage the human and financial resources required to support current applications while positioning itself to realize competitive advantage
• Acceptance of outsourcing as a business strategy extends well beyond IT, with outsourcing of business functions like customer service, human resources, and finance and administration projected to grow at 30% annually in coming years

Types of Sourcing Arrangements

Types of Projects Outsourced

• Ongoing Software Maintenance
• Software Conversion Projects (i.e. Y2K)
• Original Application Development

What is Being Outsourced?

• No area of the development lifecycle is immune to outsourcing
• In-house teams still do the majority of higher-abstraction activities, such as project management, requirements gathering, architecture, design, modeling, R&D and deployment
• However, offshore teams aren't simply being tasked with writing code

Outsourcing Literature Sources

Outsourcing Objectives

• Outsourcing arrangements are not typical purchaser/vendor relationships, and confidence that the vendor can work in a partnership is vital to a successful arrangement
• It is essential that the objectives and success criteria for outsourcing are clearly understood within the organization

Outsourcing Agreements

• Any outsourcing arrangement must be tailored to create a win/win deal that balances potential risk between the client and the vendor and creates an incentive for the vendor to work with the customer organization
• It’s becoming increasingly common for outsourcing arrangements to be structured for ‘gain-sharing’: once targeted benefits are achieved, benefits beyond the target are shared
• Arrangements such as these promote a true partnership